Will January Bring Another Rate Cut? Here's What the Market Is Pricing In

Looking at current predictions on major forecast markets, the odds are thin—just 5% probability of a 25 basis point cut in January. Counterintuitive, right? Especially when you consider what the employment data is actually telling us.

The jobs report continues to paint a softer picture of the labor market. Yet despite this weakness, rate cut expectations remain surprisingly restrained heading into the new year. This disconnect between economic fundamentals and policy odds raises an interesting question.

Bond markets might have the final say here. If treasury yields start rolling over and shift direction, that could be the catalyst that reshapes rate expectations entirely. When bonds move, narratives often follow—and sometimes policy follows after that. The real trigger might not be what happens with employment data, but rather how fixed income markets respond to inflation dynamics and growth prospects ahead.